Jerald D. McKinley v. James S. Welch, Jr.

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2002-CT-02070-SCT

JERALD D. McKINLEY

v.

THE LAMAR BANK, JAMES S. WELCH, JR., AND
GEORGE GUNTER

ON WRIT OF CERTIORARI

DATE OF JUDGMENT: 10/29/2002
TRIAL JUDGE: HON. MICHAEL R. EUBANKS
COURT FROM WHICH APPEALED: LAMAR COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: LAWRENCE E. ABERNATHY, III
JOHN T. KERSH
ATTORNEYS FOR APPELLEES: AMANDA CLEARMAN WADDELL
S. ROBERT HAMMOND, JR.
MONICA R. MORRISON
RICHARD F. YARBOROUGH, JR.
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: THE JUDGMENT OF THE COURT OF APPEALS
IS REVERSED, AND THE JUDGMENT OF THE
LAMAR COUNTY CIRCUIT COURT IS
REINSTATED AND AFFIRMED – 09/22/2005
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

EN BANC.

CARLSON, JUSTICE, FOR THE COURT:

¶1. Claiming, inter alia, that a bank had wrongfully commenced foreclosure proceedings

on his property pursuant to a deed of trust which allegedly had previously been satisfied and

canceled of record, Jerald D. McKinley commenced a suit for damages against the bank, the
original holder of the deed of trust, and the bank’s substituted trustee. The trial court granted

summary judgment in favor of the defendants and entered a final judgment dismissing

McKinley’s case with prejudice. Aggrieved by the trial court’s dismissal of his case,

McKinley appealed, and his case was assigned to the Court of Appeals, which reversed the trial

court’s judgment and remanded this case for a jury trial. McKinley v. Lamar Bank, __ So.2d

__, 2004 WL 1662257 (Miss. Ct. App. 2004). Upon a grant of certiorari, we find that the

Court of Appeals erred; therefore, we reverse the judgment of the Court of Appeals and

reinstate and affirm the judgment of dismissal entered by the Circuit Court of Lamar County.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2. The following facts are gleaned from the opinion of the Court of Appeals:

Jerald and Minnie McKinley purchased a home from James S. Welch, Jr. on
May 25, 1990. The McKinleys executed a deed of trust and promissory note to
Welch to secure financing of the home. The deed of trust secured a $50,000
indebtedness and provided for monthly payments in the amount of $482.40. It
was recorded in the Forrest County Chancery Clerk’s office on May 29, 1990.

On March 17, 1995, Welch recorded a photocopy of the original recorded deed
of trust. The photocopy was denoted as a “Corrected Deed of Trust,” in which
a Bobbie B. Hudson replaced Welch as the beneficiary. On May 23, 1995,
Hudson reassigned all of her interest in the deed of trust back to Welch.
Additionally, on that same day, Welch assigned all of his interest in the deed of
trust to Lamar Bank as collateral for a loan financed by the bank. Both of these
assignments were filed in the clerk’s office on June 6, 1995. It is noteworthy
that the note from the McKinleys to Welch was assigned to Lamar Bank, but the
bank never notified the McKinleys of the assignment. Apparently, the
McKinleys continued making payments to Welch, with no payments ever being
made to Lamar Bank. Further, the bank did not send the notice of foreclosure
to the McKinleys.

2
 Gunter testified by deposition that he never talked with Welch prior to initiating
foreclosure proceedings. He took Lamar Bank’s word that the McKinleys were
in default on their promissory note to Welch. Lamar Bank said that Welch told
it that the McKinleys were in default.

On July 5, 1996, Welch canceled the recorded deed of trust in which he was
listed as the beneficiary. On May 19, 1997, he paid off the loan financed by
Lamar Bank and, on the same day, assigned to the bank for a second time all of
his interest in the McKinley deed of trust. This second assignment was security
for a new loan. This assignment was filed on June 23, 1997.

In March 2001, McKinley defaulted on his promissory note to Welch. As a
result, Lamar Bank appointed George Gunter as substitute trustee of the deed
of trust and authorized Gunter to initiate foreclosure proceedings on
McKinley’s property. Apparently, McKinley was not notified of the impending
foreclosure proceedings, for according to McKinley, he learned of the
foreclosure proceedings from his son who had seen the published notice in the
local newspaper.

McKinley filed a Chapter 13 bankruptcy to interrupt the foreclosure
proceedings. In response to the bankruptcy filing, Gunter terminated the
foreclosure proceedings and took no further action in this regard. McKinley
continued to live in the house without making any further payments until the
house was destroyed by a fire in November 2001.

Id. at **2-3, ¶¶ 3-8 (footnotes omitted).

¶3. Asserting that the Lamar Bank, James S. Welch, Jr., and George Gunter initiated

foreclosure proceedings against him on a deed of trust which Lamar Bank, Welch and Gunter

knew had been satisfied and canceled of record, Jerald D. McKinley commenced this action

against the Bank, Welch, and Gunter on May 18, 2001. In his six-count amended complaint

filed on October 9, 2002, pursuant to an agreed court order allowing the amended complaint,

McKinley charged the defendants with (1) extortion, (2) conversion, (3) slander and libel, (4)

gross negligence or willful misconduct, (5) conspiracy, and (6) conduct justifying the award

3
of punitive damages. After extensive discovery, McKinley filed a motion for partial summary

judgment, and the Bank and Gunter filed separate motions for summary judgment. We note

here that the record reveals that Welch failed to appear and defend this action, and Welch

likewise never submitted any sworn testimony via deposition or otherwise.1 In his motion for

partial summary judgment, McKinley sought a judicial declaration that the “corrected deed of

trust” recorded by Welch on March 17, 1995, and indicating Bobbie B. Hudson to be the

beneficiary thereunder, was “void, and of no consequence or effect.” On the other hand, in

1
As to Welch, we can ascertain certain facts after a thorough review of the record. At the time of
the commencement of the suit on May 18, 2001, a summons was issued for service upon Welch at 155
Beverly Hills Loop, Petal, Mississippi. The record is silent as to a return being filed on this summons. On May
22, 2001, an alias summons was issued for service upon Welch (no address stated). Again, there is no return
on this summons in the record. On June 29, 2001, another alias summons was issued for service upon Welch
at P. O. Box 142, Gaulman (sic), Mississippi 39077. Once again, no return on this summons can be found in
the record. However, on August 6, 2001, Welch, through an attorney, filed a separate motion for an additional
thirty days to respond to the amended complaint, but “without waiving any of his defenses or objections to the
in personam jurisdiction or subject matter jurisdiction of [the] [c]ourt.” On August 28, 2001, the same attorney
who filed the motion for additional time for Welch, filed a motion to withdraw due to a “conflict” which had
arisen between Welch and the attorney. By order entered on September 11, 2001, the trial judge permitted
the attorney to withdraw as Welch’s attorney of record and the trial judge via the same order granted Welch
an additional thirty days to retain an attorney, to file an answer, and to respond to discovery. This is the last
time we hear from Welch, directly or through an attorney. We further note that the record reveals that on
April 3, 2002, an agreed order setting a trial date was entered, and while the order was agreed to by the
attorneys for McKinley, the Lamar Bank, and Gunter, Welch, nor anyone in his behalf, executed the order.
We likewise note that subsequent executed certificates of service by the various attorneys reflect that copies
of the designated pleadings were mailed directly to an unrepresented Welch. In fact, the trial judge, in his
subsequently entered opinion, found as a fact that “[t]hough also a defendant in the lawsuit, Welch has failed
to defend himself and has apparently not given any testimony in this action.” Although Welch’s name
remained in the style of the case in all pleadings filed in the trial court (and before us), the trial court’s final
judgment dismissed only the Lamar Bank and Gunter, but not Welch. Thus, the trial court wisely entered a
Rule 54(b) final judgment. See Miss. R. Civ. P. 54(b). However, McKinley’s notice of appeal stated that he
was appealing to this Court “against the Lamar Bank, James S. Welch, Jr., and George Gunter,” even though
no final judgment was entered as to Welch. Finally, Welch has made no appearance before the Court of
Appeals or this Court during the pendency of this appeal. Accordingly, we find that Welch is not a party to
this appeal.

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their respective motions for summary judgment, the Bank and Gunter sought a grant of

summary judgment, in toto, thus dismissing this action against them.

¶4. In a thorough 15-page opinion and order Circuit Judge Michael R. Eubanks denied

McKinley’s motion for partial summary judgment and granted the motions for summary

judgment filed by the Bank and Gunter. Likewise, on the same date, Judge Eubanks entered a

final judgment consistent with the opinion and order, thus dismissing this action, with

prejudice, pursuant to Miss. R. Civ. P. 54(b) and 58.

¶5. We find the trial court’s detailed findings of fact to be critical to our disposition of this

case; however, so as to not participate in an exercise of lengthy quotation of the trial court’s

findings of fact, we will summarize these findings which are not redundant to the findings of

fact made by the Court of Appeals, as we have already noted through quotation. We begin by

noting that while the Court of Appeals found that on July 5, 1996, Welch “canceled the

recorded deed of trust in which he was listed as a beneficiary,” the trial court found that Welch

“attempted to cancel” the deed of trust. The trial court also found that (1) McKinley failed to

make both the April, 2001 and May, 2001 payments to Welch; (2) on May 9, 2001, after

learning of the foreclosure proceedings from his son, McKinley went to Gunter’s office

wanting to know the amount of money required to “get current on his house” and McKinley was

informed by Gunter that the sum was $4,906.42, which included the arrearage, as well as

publication costs and attorneys fees; (3) the foreclosure was scheduled to take place on May

18, 2001, but one day before the scheduled foreclosure, McKinley filed for Chapter 13

bankruptcy protection and Gunter, therefore, canceled the foreclosure proceedings so as to

5
not violate the bankruptcy court’s automatic stay; and, (4) on May 28, 2001, McKinley

dismissed his bankruptcy proceedings, Gunter made no further attempts to foreclose on

McKinley’s property, and McKinley continued to live in his home while making no further

payments pursuant to the promissory note and deed of trust.2

¶6. The trial court also detailed McKinley’s version of certain facts. As the trial court

stated, McKinley recalled (as noted by his deposition testimony) that his used car dealership

had purchased a $4,300 cashier’s check from the Lamar Bank, payable to Welch, on April 16,

1999, but that McKinley did not remember purchasing the cashier’s check. Also, while

McKinley stated the purpose for purchasing the cashier’s check was to use as a “cushion” in

the event that he missed a payment (evidently claiming that Welch could “draw down” on this

cashier’s check when McKinley missed a payment), McKinley never discussed this

“arrangement” with Welch. Nor was there any discussion as to how Welch should apply the

$4,300, including whether Welch could simply apply the entire amount to the current balance

on the note. Notwithstanding all of this, McKinley claimed that he could not be in default since

Welch supposedly had available the sum of $4,300 from which to “deduct” any missed monthly

payment. McKinley also never revealed this “cushion” to Gunter. McKinley also claimed that

he had no further liability under the note and deed of trust after Welch canceled the deed of

trust of record on July 5, 1996. McKinley attempted to undergird this assertion by stating that

before his wife, Minnie, passed away in 1997, Minnie told McKinley not to worry about the

2
As noted by the trial court and the Court of Appeals, McKinley’s house was destroyed by fire in
November, 2001.

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house note, which he interpreted to mean that she had paid off the note. However, McKinley

admitted that he was not aware of how Minnie could have generated the money to pay off the

promissory note unless it happened to have come from her friend in Memphis, Tennessee, or

a brother in Texas. The trial court noted, however, that this purported conversation between

Minnie and McKinley occurred in June, 1997, almost a year after Welch had marked the deed

of trust as canceled, and that despite Minnie’s alleged assurance that the house note “was taken

care of,” McKinley continued making the monthly payments pursuant to the promissory note

until March, 2001.

¶7. McKinley made an alternative claim that Welch’s July, 1996 execution of the

cancellation stamp on the deed of trust took effect when Welch paid off the first note to the

Lamar Bank in 1997, and the 1995 assignment of the original deed of trust terminated. Using

McKinley’s logic, even if, due to the 1995 assignment of the original deed of trust to the Bank,

Welch had no interest in the original deed of trust at the time he stamped it as cancelled in

1996, when Welch paid off the debt to the Bank in 1997 and the 1995 deed of trust assignment

was terminated, the original deed of trust was again vested in Welch and Welch was thus bound

by his 1996 cancellation of the deed of trust. Therefore, according to McKinley, because the

deed of trust was cancelled, he owned the house, lien-free, and he was thus not in default on

his mortgage. Finally, McKinley asserted that the 1995 “corrected deed of trust” purporting

to change the beneficiary from Welch to Hudson, was void; therefore, the original 1990 deed

of trust was also void.

PROCEEDINGS IN THE COURT OF APPEALS

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¶8. In his brief, McKinley sets out eleven issues in his Statement of the Issues, but restates

these issues by arguing five points: The trial court opinion was based on a mistake of fact; the

foreclosure proceedings were commenced on a deed of trust which had been stamped “[p]aid

in full, satisfied and cancelled;” even if the deed of trust had been assigned to the Lamar Bank

at the time of its cancellation, the cancellation became valid when Welch paid off the

promissory note to the Bank; McKinley was not in default on his promissory note to Welch;

and, the trial court inappropriately relied upon an affidavit of Deborah Graham, Gunter’s

secretary, even though Graham was not identified in discovery as a potential witness, and even

though Graham’s testimony contradicted Gunter’s testimony. 3 The Court of Appeals

summarized the issues as:

(1) [W]hether the altered deed of trust was an original document or a photocopy,
(2) whether the loan for the house had been paid off, (3) whether [McKinley]
was in default on his house payments in light of a lump sum payment to Welch,
and (4) whether the affidavit of Deborah Graham should have been stricken.

2004 WL 1662257, at *1 ¶ 1.

3
In her affidavit attached to Gunter’s motion for summary judgment, Graham, Gunter’s legal
secretary, testified, inter alia, that Welch came into the office wanting to foreclose on the property because
McKinley was behind in his payments; that the Lamar Bank had sent Welch to Gunter’s office to make the
foreclosure request; that upon her request for Welch’s receipt book, Welch complied with the request by
bringing Graham the receipt book several days later, at which time she copied the receipt book and returned
the original receipt book to Welch; that she informed Gunter of Welch’s office visits; that on April 10, 2001,
she went to Lamar Bank, at which time Bank Vice-President Brad Holmes executed an Appointment of
Substituted Trustee appointing Gunter as the substitute trustee; that prior to the first newspaper publication
of the foreclosure notice, McKinley’s son (Mark), who worked in the same building where Gunter’s law
office was located, came by the law office, at which time Graham informed him that “his father’s house was
in the process of foreclosure;” that Mark expressed no surprise or emotion upon learning about the
foreclosure, but instead stated that “he knew his father was struggling and did not know why his father did
not come to he and his brothers for help;” and, that Mark requested and received from her the arrearage
amount, and stated to her that he was going to discuss this matter with his brothers to determine if they could
assist their father.

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¶9. The Court of Appeals, in a 5-3 opinion (three judges dissented without a separate

written opinion), found no merit in Issues (1), (3), and (4), but found as to Issue (2) that there

existed a genuine issue of material fact as to whether the indebtedness which was secured by

the deed of trust had been satisfied. En route to its finding on this issue, the Court of Appeals

stated:

We have not been able to find any case in Mississippi or in any other
jurisdiction on all fours with the case before us. However, we believe that
Emmons v. Lake State Ins. Co., 193 Mich. App. 460, 484 N.W.2d 712, 714
(1992) and Blacketor v. Cartee, 172 Miss. 889, 161 So. 696 (1935) provide
guidance.

2004 WL 1662257, at *3, ¶ 13. In relying on Emmons and Cartee, the Court of Appeals held:

Following the reasoning in Emmons and Cartee, we find that although the
assignment was absolute on its face, it gave Lamar Bank only a qualified interest
in the McKinleys’ property. Since the assignment was given as collateral
security for Welch’s loan, the interest conveyed was commensurate with the
debt. Hence, when Welch paid off his loan to Lamar Bank on May 19, 1997, the
bank’s interest in the secured property ceased as of that moment, and the bank’s
interest was reinvested in Welch to the same extent as it would have been if an
actual reassignment from the bank to Welch had been executed.4 The fact that
Welch apparently immediately thereafter executed another assignment does not
prevent the aforementioned result.

Id. at *4, ¶ 21. In applying the “after-acquired title” doctrine, the Court of Appeals opined that

the indebtedness owed by McKinley to Welch had been paid off and satisfied. Id. at *5, ¶¶ 23-

4
There appeared here in the Court of Appeals’s opinion footnote 7, which stated:

This finding is commensurate with Mississippi law regarding the effect of
payment of debts subjected to collateral security. See Mississippi Code
Annotated section 89-1-49 (1972) which states that payment of the money
secured by a deed of trust “shall extinguish it, and revest the title in the
mortgagor as effectually as if reconveyed.”

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24.5 The Court of Appeals likewise found an issue of negligence on the part of the Bank and

Gunter, which could only be resolved by a jury. The questionable negligence was the purported

failure by the Bank and Gunter to exercise ordinary diligence to discover that there was a

recorded cancellation of the deed of trust. Id. at **5-6, ¶¶ 25-28, *7, ¶ 36.

¶10. The Court of Appeals, therefore, reversed the trial court on this issue and remanded the

case to the trial court for a jury trial. After the Court of Appeals denied the motion for

rehearing, Gunter filed a petition for writ of certiorari, which was granted by this Court.

DISCUSSION

¶11. Gunter asserts that the Court of Appeals erred in (1) failing to address whether the

purported cancellation of the original deed of trust was ineffective, “as it was a spoliation of

that document,” thus causing the original deed of trust to still be enforceable and causing the

commencement of the foreclosure proceedings to be appropriate; (2) applying the “after-

acquired title” doctrine to this case since McKinley had the same capability as Gunter to obtain

information and McKinley’s statements to Gunter amounted to an admission that he

(McKinley) was in default on the promissory note; (3) applying the “after-acquired title”

doctrine because McKinley had not paid for any “conveyance of any interest from Welch;” (4)

holding that Gunter had failed to exercise ordinary diligence; and, (5) relying on Emmons since

McKinley’s property was never foreclosed on and the loan securing Welch’s second

assignment to the Bank had not been satisfied.

5
However, in its conclusion, the Court of Appeals found that there existed a jury issue as to whether
McKinley’s note had been paid in full at the time of the initiation of the foreclosure proceedings.

10
¶12. We must remember that this appeal was initially commenced by McKinley because of

the grant of summary judgment by the Lamar County Circuit Court. Thus, while we consider

today’s case as a result of Gunter’s petition for writ of certiorari, such petition is due to the

Court of Appeals’s finding of error on the part of the trial court in granting summary judgment

in favor of Gunter and Lamar Bank. The issues before us today go directly to the propriety or

impropriety on the part of the trial court in granting summary judgment. To determine whether

the Court of Appeals properly reversed the trial court’s grant of summary judgment, we visit

anew the trial court’s actions. We thus apply a de novo standard of review concerning the

propriety of a trial court’s grant or denial of summary judgment. Montgomery v. Woolbright,

904 So.2d 1027, 1029 (Miss. 2004); Brown ex rel. Ford v. J. J. Ferguson Sand & Gravel

Co., 858 So.2d 129, 130 (Miss. 2003); Armistead v. Minor, 815 So.2d 1189, 1191-92 (Miss.

2002); Richardson v. Methodist Hosp., 807 So.2d 1244, 1246 (Miss. 2002). We recently

discussed our responsibilities in reviewing cases involving summary judgments:

We apply a de novo standard of review of a trial court’s grant or denial of a
motion for summary judgment. Satchfield v. R. R. Morrison & Son, Inc., 872
So.2d 661, 663 (Miss. 2004); McMillan v. Rodriguez, 823 So.2d 1173, 1176-
77 (Miss. 2002); Lewallen v. Slawson, 822 So.2d 236, 237-38 (Miss. 2002);
Jenkins v. Ohio Cas. Ins. Co., 794 So.2d 228, 232 (Miss. 2001); Aetna Cas.,
& Sur. Co. v. Berry, 669 So.2d 56, 70 (Miss. 1996). Accordingly, just like the
trial court, this Court looks at all evidentiary matters in the record, including
admissions in pleadings, answers to interrogatories, depositions, affidavits, etc.
Id. at 70. The evidence must be viewed in the light most favorable to the party
against whom the motion has been made. Id. If, in this view, the moving party
is entitled to judgment as a matter of law, summary judgment should forthwith
be entered in his favor. Id. When a motion for summary judgment is made and
supported as provided in Miss. R. Civ. P. 56, an adverse party may not rest upon
the mere allegations or denials of the pleadings, but instead the response must

11
 set forth specific facts showing that there is a genuine issue for trial. Miller v.
Meeks, 762 So.2d 302, 304 (Miss. 2000). If any triable issues of fact exist, the
trial court’s decision to grant summary judgment will be reversed. Otherwise,
the decision is affirmed. Id. at 304.

Harrison v. Chandler-Sampson Ins., Inc., 891 So.2d 224, 228 (Miss. 2005).

¶13. We first address the Court of Appeals’ treatment of the three issues raised by McKinley

and in which the Court of Appeals found no merit. McKinley claimed error in the trial court’s

failure to find that the original 1990 deed of trust from the McKinleys to Welch had been

altered. We agree that both the trial court and the Court of Appeals correctly found that the

original deed of trust had not been altered. In essence, McKinley argues that when Welch filed

his “corrected” deed of trust in 1995, he had in fact altered the original deed of trust and not

just a copy of the deed of trust. We again note that the 1995 “corrected” deed of trust reveals

that the name “James S. Welch, Jr.” is lined through, with the word “Corrected” hand-written

above the “line-through.” Below the “line-through” is the name “Bobbie B. Hudson” written in

long-hand. On this issue, the Court of Appeals found:

A thorough review of the record reveals that Welch did not alter the original
document, but instead altered a photocopy of the original document. Therefore,
the original deed of trust remained valid and is thus binding. For the forgoing
(sic) reasons, we find this issue is without merit.

McKinley v. Lamar Bank, 2004 WL 1662257, at *2, ¶ 11. Our review of the record brings

us to the same conclusion as that of the trial court and the Court of Appeals. We also note that

there are notations on the “corrected” deed of trust, unrelated to the “corrections,” which

would not be on the original document. We unhesitatingly conclude that any alterations by

Welch were done to a photocopy of the original deed of trust, not to the original document

12
itself. The trial court cited Holmes v. Ford, 179 Miss. 673, 176 So. 524 (1937); and, Upton

v. Bush, 141 Miss. 660, 107 So. 284 (1926). In so doing, the trial court correctly

distinguished these cases from the present case. In Holmes and Upton, the actual original

documents were altered by way of erasures of the names of the payees and insertions of the

names of different payees/beneficiaries. As the trial court correctly found in today’s case,

Welch did not alter the 1990 original deed of trust, but instead altered a photocopy of the deed

of trust and recorded the copy as a “corrected” deed of trust. Thus, the trial court also quite

appropriately found that the original deed of trust remained in full force and effect.

¶14. McKinley also claimed error in the trial court’s finding that he was in default,

notwithstanding the $4,300 lump sum payment he made to Welch by way of a certified

cashier’s check. Again, we agree with both the trial court and the Court of Appeals in their

findings that this lump sum payment did not cause McKinley to avoid being in default.

McKinley admitted missing at least three monthly payments in the Spring of 2001, but he

asserts that when he missed those monthly payments, Welch should have been required to

“draw down” on this $4,300 lump sum payment, by way of crediting McKinley with these

payments.6 Again, as correctly pointed out by the Court of Appeals, the record is totally devoid

of any evidence of any such agreement by McKinley and Welch that this $4,300 lump sum

payment would be used in this way. In fact, McKinley readily admitted that he and Welch never

6
Even though the record is inconsistent as to the number of payments McKinley missed in the Spring
of 2001, in his sworn deposition testimony of June 11, 2002, McKinley admitted that he failed to make the
monthly payments in March, April and May of 2001.

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discussed any such agreement. 2004 WL 1662257, at *6, ¶¶ 29-30. Indeed, the record

reveals that at his deposition of June 11, 2002, McKinley was presented with a copy of the

$4,300 cashiers check and then testified under oath that (1) he could not remember purchasing

the check, though he stated that “undoubtedly I did;” (2) he had no recollection of paying the

$4,300 to Welch; (3) he did not remember discussing any arrangement with Welch concerning

the $4,300 “and if I say anything different I wouldn’t be telling the truth;” (4) he believed

Welch used this check to pay on the note; (5) “[w]hat I feel like happened” was that “I”made

this payment to Welch because Welch “[m]ore than likely come by and asked for it” because

“[h]e might have had financial trouble;” and (6) he did not feel that he was behind on his note

payments in the Spring of 2001 because the $4,300 “could have been used for payments.”7 Our

independent review of the record thus causes us to reach the same conclusion as the Court of

Appeals on the issue of McKinley’s default on the promissory note.

¶15. Additionally, McKinley asserted that Deborah Graham’s affidavit, which was attached

as an exhibit to Gunter’s motion for summary judgment, was inappropriately considered by the

trial judge in granting summary judgment since Graham had not been revealed in pre-trial

discovery as a potential witness, and since her affidavit contradicted Gunter’s deposition

testimony. Id. at *6, ¶ 31. On this issue, the Court of Appeals stated:

A review of the trial judge’s opinion and order reveals that the judge did not rely
solely on Graham’s affidavit in reaching a decision on the merits of the case.

7
McKinley also testified that other than the purchase of Welch’s house, he [McKinley] had never
had any type of business relationship with Welch.

14
 Further the trial judge found that there had not been a foreclosure, therefore
Graham’s affidavit was immaterial.

Id. at *7, ¶ 33. Our thorough review of the trial judge’s opinion and order causes us to reach

the same conclusion as the Court of Appeals – the trial judge obviously relied on the totality

of the facts and circumstances laid out in the various pleadings and other documents before

him, and he certainly did not rely solely on Graham’s affidavit.

¶16. Accordingly, for these reasons, we find that McKinley’s assignments of error relating

to Welch’s alteration of the deed of trust, McKinley’s default on the house note and deed of

trust, and the trial court’s treatment of Deborah Graham’s affidavit are wholly without merit.

¶17. Having reached this point, we now focus on the one assignment of error as advanced by

McKinley which the Court of Appeals found to have merit. McKinley asserted that Welch’s

1996 cancellation of the deed of trust became effective once Welch paid off his first loan to

Lamar Bank in 1997. The Court of Appeals succinctly set out McKinley’s claims on this

issue:

McKinley next claims that the debt on the deed of trust was fully satisfied when
Welch had the deed of trust stamped “cancelled,” and the cancellation became
effective when Welch paid off his first loan to Lamar Bank in 1997. McKinley
argues that even if Welch did not have an interest in the deed of trust at the time
of the attempted cancellation due to his first assignment to the bank, Welch
regained his interest when he paid off the debt. McKinley maintains that at this
point, the assignment terminated, and Welch was bound by his actions in
canceling the deed of trust, thus making him [McKinley] the owner of the house,
free and clear.

Id. at *2, ¶ 12.

¶18. The Court of Appeals stated:

15
 McKinley’s complaint against Welch, Gunter, and Lamar Bank sought to recover
damages for the wrongful initiation of foreclosure proceedings against his
property. His theories for recovery were extortion, conversion, libel and
slander, and conspiracy. He also sought punitive damages. Whether he can
recover under either of these theories depends upon whether there was a valid
and justified initiation of foreclosure proceedings. We have determined that a
genuine issue of material fact exists as to whether McKinley’s note had been
paid in full at the time the foreclosure proceedings were initiated. On remand,
McKinley shall bear the burden of proving that the note had in fact been paid in
full prior to the initiation of foreclosure proceedings or if the note had not been
paid in full, that he was not in default at the time foreclosure proceedings were
initiated.

We only hold here that the mere fact that the deed of trust had been assigned to
Lamar Bank when the attempted cancellation occurred does not preclude a
finding that the indebtedness had in fact been paid in full when the attempted
cancellation occurred. Although the cancellation is certainly evidence that the
indebtedness had been paid in full, that determination must be made by a jury.

Id. at *7, ¶¶ 35-36.

¶19. While Gunter sets out five reasons for us to find that the Court of Appeals erred, we are

firmly convinced that this case hinges for the most part on the issue of the effect of Welch’s

May 23, 1995, assignment of the McKinley deed of trust to the Lamar Bank, which in turn

affects the validity of Welch’s July 5, 1996, “cancellation” of the 1990 McKinley-to-Welch

deed of trust.

The provisions of the 1990 McKinley-to-Welch deed of trust state, inter alia:

All the right (sic), powers, and privileges, of the said Beneficiary [Welch]
hereunder shall vest in, inure to and be possessed by the heirs, legal
representatives, successors, or assigns, as the case may be, of the said
Beneficiary.

The provisions of Welch’s May 23, 1995, assignment to the Lamar Bank state:

ASSIGNMENT OF DEED OF TRUST

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 FOR AND IN CONSIDERATION of the sum of TEN DOLLARS ($10.00), cash
in hand paid, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned JAMES S.
WELCH, JR., does hereby convey, transfer, set-over and assign with recourse
to THE LAMAR BANK, all his or her (sic) right, title and interest in and to that
certain promissory note indebtedness and deed of trust securing same executed
on May 25, 1990 by Jerald D. McKinley, Sr. and wife, Minnie F. McKinley, to
Penny Jones Alexander, Trustee in favor of James S. Welch, Jr., which said deed
of trust is recorded in Book 734 at Page 432 and which was re-recorded in Book
877 at Page 106 of the Land Deed of Trust Records of Forrest County,
Mississippi.8

The language of this assignment is general and unqualified. We have previously addressed the

validity and effect of assignments of deeds of trust. In EB, Inc. v. Allen, 722 So.2d 555, 564

(Miss. 1998), we stated:

“Generally, the intention of the parties ascertained from the entire transaction,
including conduct, determines whether the assignment is absolute or intended
only as a collateral security.” International Harvester Co. v. Peoples Bank &
Trust Co., 402 So.2d 856, 861 (Miss. 1981) (quoting 6A C.J.S. Assignments
Section 82, page 732). “[A] valid assignment of a debt or contract conveys the
entire interest of the assignor to the assignee, and thereafter the assignor has no
interest therein.” International Harvester Co., 402 So.2d at 861. “As a general
rule, a valid and unqualified assignment operates to transfer to the assignee all
the right, title, or interest of the assignor in the thing assigned, but not to confer
upon the assignee any greater right or interest than that possessed by the
assignor.” Id. at 861 (quoting 6A C.J.S. Assignments, Section 73, pages 710-
12).

722 So.2d at 564.

8
The “re-recorded” deed of trust to which reference is made in this Assignment is the
“corrected”deed of trust attempting to change the beneficiary from Welch to Hudson. As already discussed,
this attempted change of beneficiary by way of altering and filing a photocopy of the original deed of trust,
did not affect the validity of the original deed of trust. Additionally, it is clear that Hudson, by her actions,
desired to convey any interest she had in the “corrected” deed of trust back to Welch prior to his assignment
of the original of deed of trust to the Bank.

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¶20. Thus, in today’s case, based on the unqualified language of the assignment, once Welch

executed the assignment of the deed of trust to Lamar Bank on May 23, 1995, and once this

assignment was filed of record, Welch had no further interest whatsoever in the promissory

note and deed of trust executed by the McKinleys in his favor on May 25, 1990, and Welch’s

“cancellation” of the deed of trust on July 5, 1996, was thus invalid and of no effect – Welch

possessed nothing on which to act on July 5, 1996.9 Based on the record, the trial court

correctly found that McKinley had not paid off the deed of trust and that McKinley was in

default on the note and deed of trust. Even though McKinley claimed that his wife, prior to her

death, told McKinley that the house note “was taken care of,” the record is devoid of any

evidence that the note had been satisfied. As correctly noted by the trial court, even though

McKinley interpreted his wife’s remarks to mean that the note had been satisfied, and even

though this conversation occurred almost a year after Welch marked the deed of trust as “[p]aid

in full, [s]atisfied and [c]ancelled,” McKinley continued making the monthly payments to

Welch pursuant to the promissory note until March, 2001. Actions speak louder than words.

McKinley’s statements of his belief as to the status of the promissory note as of June, 1997,

when his wife purportedly made these comments to him, are belied by the record. Also,

McKinley admitted missing three payments in the spring of 2001, because he believed Welch

9
McKinley asserts, alternatively, that even if Welch’s May 23, 1995 assignment to Lamar Bank
effectively transferred all of Welch’s rights in the deed of trust to the Bank, Welch’s 1997 satisfaction of the
original promissory note validated his 1996 cancellation of the deed of trust. In support of the position,
McKinley relies on the “after-acquired title” doctrine. Without getting into a lengthy discussion of this
doctrine, we find this doctrine to be wholly inapplicable to today’s case. See Walters v. Merchants &
Manufacturers Bank of Ellisville, 218 Miss. 777, 67 So.2d 714 (1953). See also Buchanan v. Stinson,
335 So.2d 912, 913-14 (Miss. 1976); Crooker v. Hollingsworth, 210 Miss. 636, 46 So.2d 541 (1950).

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had “slashed” his tires. McKinley’s assertions that he believed that, notwithstanding his

withholding of payments to Welch, he was not in default on the note because he had paid Welch

a $4,300 “cushion” from which to deduct any missed payments are again belied by the record.

In fact, McKinley admitted that he and Welch never discussed any such arrangement. Thus, the

Court of Appeals erred when it concluded that there were genuine issues of material fact as to

“whether McKinley’s note had been paid in full at the time the foreclosure proceedings were

initiated” and “if the note had not been paid in full, [whether] he was not in default at the time

foreclosure proceedings were initiated.” McKinley v. Lamar Bank, 2004 WL 1662257 at *7,

¶ 35.

¶21. Also, the Court of Appeals found that, as to Gunter and the Bank, “[o]rdinary diligence

on their part would have revealed a recorded cancellation of the deed of trust, and thus should

have led them to inquire as to whether the debt had actually been satisfied.” Id. at *5, ¶ 25.

However, the record bears out the fact that Gunter and the Bank were aware of Welch’s

purported cancellation of the deed of trust, and Gunter, as the attorney and substituted trustee,

determined that the “cancellation” carried no adverse legal effect since Welch had previously

assigned “all his....right, title, and interest” in the note and deed of trust to the Lamar Bank. In

fact, Gunter testified via his deposition that he informed the Bank in his title opinion of the

existence of Welch’s “cancellation” of the deed of trust and that notwithstanding Welch’s

actions, the Bank still had a valid deed of trust on which to conduct a foreclosure. Likewise

Gunter’s review of Welch’s receipt book caused Gunter to inform McKinley, upon inquiry, that

it would take payment of the sum of $4,906.42 to stop the foreclosure.

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¶22. Concerning the 2001 foreclosure, the trial court found, inter alia:

The Court has found that Welch’s assignments in both 1995 and 1997 to Lamar
Bank were valid. The Court has found McKinley knew he was in default on his
mortgage. As discussed above, McKinley knew he was in default when he failed
to make his monthly mortgage payment from March 2001 to May 2001. Since
he has affirmatively stated he did not tell Welch to use the $4,300.00 payment
as a “cushion,” should he miss a payment now and then, his argument that such
is what he intended all along for Welch to do is of no import. Further
McKinley’s speculation that Minnie somehow paid the note off in 1996 is
wholly unsupported and, in fact, is contradicted by his own testimony that he
continued making the monthly mortgage payments from the time shortly before
Minnie’s passing in 1997 when she made this statement up until February 2001.
Therefore, the only remaining question is whether or not the foreclosure was
carried out correctly under law.

Gunter, as substituted trustee, had a duty under Mississippi law to conduct the
foreclosure sale of the McKinley home in a manner most beneficial to
McKinley. Rawlings v. Anderson, 149 Miss. 632, 115 So. 714 (1928); Lake
Hillsdale Estates, Inc. v. Galloway, 473 So.2d 461 (Miss. 1985). Gunter’s
duties as substituted trustee would be satisfied where the sale is conducted in,
“a commercially reasonable manner.” Wansley v. First National Bank, 566
So.2d 1218, 1221 (1990). Gunter’s duties are subject to the power of sale
provisions of Miss. Code Ann. § 89-1-55, § 89-1-57 and § 89-1-59. McKinley
does not argue that Gunter did not properly conduct foreclosure proceedings
under Mississippi law. Instead, McKinley argues that Gunter did not verify that
McKinley was in default on his mortgage because Gunter did not speak directly
to Welch, but rather had Welch speak with his secretary, Deborah Graham
(“Graham”).

Gunter instructed Graham to tell Welch to bring proof of McKinley’s default
to his office, which he did. Graham then went to Lamar Bank and got the bank
to sign the Appointment of Substituted Trustee, which was signed and recorded
in Forrest County, Book 1138, Page 395, on April 17, 2001. Along with the
proper notices Gunter ran in the Hattiesburg American newspaper, McKinley
has admitted to having actual notice of the foreclosure proceedings and to being
informed as to how much money he would have to pay to stop the foreclosure.
Instead of paying this arrearage, McKinley ran to bankruptcy court, thus stopping
the foreclosure proceedings and insuring that he could continue to reside in the
home free of charge. Accordingly, Gunter complied with all his duties as

20
 substituted trustee, including those duties to McKinley. There was no wrongful
foreclosure because there was never a foreclosure at all. 10

(Emphasis in original). As correctly noted by the trial court, “[t]here was no wrongful

foreclosure because there was never a foreclosure at all.” This important fact cannot be

over-emphasized. Once McKinley received the stay of the foreclosure proceedings from the

bankruptcy court, Gunter forever ceased any further efforts to foreclose on McKinley’s house

and property. Indeed, eleven days after receiving the stay in bankruptcy court, McKinley

requested and received a dismissal of his bankruptcy petition, and continued living “free of

charge” in his home until it was destroyed by fire in November, 2001.

¶23. Based on these reasons, we find that the Court of Appeals erred in finding that there

existed a genuine issue of material fact as to whether the indebtedness secured by the deed of

trust had been paid off at the time of the commencement of the foreclosure proceedings.
CONCLUSION

¶24. The trial court meticulously considered the motions for summary judgment, and

response in opposition to the motions. This is evident by the trial court’s detailed opinion and

order which clearly addressed all the issues by reviewing the pleadings, discovery documents,

affidavits, and all other documents submitted in support of, and in opposition to, the motions

for summary judgment, and which correctly applied the law. The Court of Appeals correctly

decided all the issues before it, except one. For the reasons stated, the Court of Appeals erred

in finding that there existed genuine issues of material fact as to whether McKinley’s

10
Upon making these findings, the trial court addressed McKinley’s claims of extortion, conversion,
slander and libel, gross negligence or willful misconduct, conspiracy, and punitive damages, found each of
these claims to be without merit, and granted summary judgment in favor of the Lamar Bank and Gunter.

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promissory note had been paid in full at the time the foreclosure proceedings were initiated,

or alternatively, that if the note had not been paid in full, whether McKinley was in default at

the time foreclosure proceedings were initiated. In this vein, the Court of Appeals also erred

in finding that there was a question of whether there was negligence on the part of the Bank

and/or Gunter since there was a recorded cancellation of the deed of trust by Welch.

¶25. Accordingly, we reverse the judgment of the Court of Appeals and reinstate and affirm

the judgment of the Lamar County Circuit Court.

¶26. THE JUDGMENT OF THE COURT OF APPEALS IS REVERSED, AND THE
JUDGMENT OF THE LAMAR COUNTY CIRCUIT COURT IS REINSTATED AND
AFFIRMED.

SMITH, C.J., WALLER AND COBB, P.JJ., DICKINSON AND RANDOLPH, JJ.,
CONCUR. EASLEY AND GRAVES, JJ., DISSENT WITHOUT SEPARATE WRITTEN
OPINION. DIAZ, J., NOT PARTICIPATING.

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